Hey y'all! Sarah here - today I’m going to be talking about pay per click ads and why budget is so important. A problem we frequently see is not enough of an ad budget. Today I’m going to show you the math behind PPC ad spend and leads, then explain how it’s possible to turn $200 in ad spend cost into $5000 in sales.
Ready? Here we go!
Doing The Math
For the sake of simplicity, we’re going to say your paid advertising goal is 10 leads; from there, we’ll work backwards. Let's assume a conservative conversion rate of 10%. That means for every 10 people that click on your pay per click ad and go to the website, one of them will fill out a form and be a true lead. Using that math to get 10 leads, then you need to send 100 people to your site.
Matching Math To The Budget
OK, we've looked at the math and all - how does budget fit into this? Good question! If we know we need to send 100 people to your site, that’s 100 clicks and the average cost per click is $2. So we need a budget of $200 to get those 10 leads.
If your budget is $50 and you want to get 10 leads using this same situation – well, you will just be wasting your time and your money because the budget is too small to make the math work. At $2 per click, you'll get 25 clicks, which times a 10% conversion rate should yield 2.5 leads. If your sales conversion rate if 50%, you might make one sale. If your sales conversion rate is 20%, you will most likely not make a sale and have wasted your money.
If you’re selling a product that costs $1,000 and you’ve got a 50% closing rate, you’ve spent $200 to get to $5000. Here's how it looks in black and white:
- 100 clicks at $2 per click = $200
- 100 clicks at 10% conversion rate = 10 leads
- 10 leads at a 50% close rate = 5 sales
- 5 sales at $1000 each = $5000
- $5000 sales - $200 cost for ads = $4800
The next time you’re thinking about paid advertising and budget, start backwards. Determine the number of leads you want and we can work together to come up with a pay per click budget that works. Don’t forget to factor in your per sale average.
Want to get started? Email me at firstname.lastname@example.org!